Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

In financial accounting, a credit memorandum from the bank indicates which of the following?

A bank error that needs to be corrected

A pending deposit not yet recorded by the bank

An increase in the company's cash balance

A decrease in the company's cash balance

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Verified step by step guidance

Understand the concept of a credit memorandum: A credit memorandum is a notification from the bank indicating that the bank has increased the company's cash balance in its records. This could be due to various reasons, such as interest earned, a correction of a previous error, or a direct deposit.

Analyze the options provided in the question: The options include a bank error, a pending deposit, an increase in the company's cash balance, and a decrease in the company's cash balance.

Eliminate incorrect options: A bank error that needs to be corrected does not necessarily indicate an increase in cash balance. A pending deposit not yet recorded by the bank is unrelated to a credit memorandum, as it refers to timing differences. A decrease in the company's cash balance would be indicated by a debit memorandum, not a credit memorandum.

Focus on the correct option: A credit memorandum specifically indicates an increase in the company's cash balance, as it reflects a positive adjustment made by the bank to the company's account.

Conclude the reasoning: Based on the explanation above, the correct answer is 'An increase in the company's cash balance,' as this aligns with the purpose of a credit memorandum in financial accounting.